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Price-Channel Effects of North-South Trade on the Direction of Technological Knowledge and Wage Inequality

Oscar Afonso and Álvaro Aguiar ()
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Álvaro Aguiar: CEMPRE, Faculdade de Economia do Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This paper develops a general equilibrium endogenous growth model that emphasizes the mechanisms, other than market size, through which trade-induced North-South technological knowledge diffusion influences the direction of technological progress and, thus, the path of intra and inter-country wage inequality. In contrast with the market-size effect, more common in previous literature on skill-biased technological change, the operation of the price channel, central to this paper, predicts an increasing high-skilled technological bias following openness, which is more in line with the recent trends observed in developed and developing countries.

Keywords: North-South trade; Technological knowledge diffusion; Direction of technological progress; Wage inequality. (search for similar items in EconPapers)
JEL-codes: F16 F43 O31 O33 (search for similar items in EconPapers)
Pages: 36 pages.
Date: 2005-03
New Economics Papers: this item is included in nep-dev, nep-int, nep-lam and nep-sea
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